| What is meant by market
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| | terms of purchase behavior. Other
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| segmentation?Market segments consist of
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| | segments are based on consumers'
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| groups of people or organizations that
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| | motivations and concerns. Marketer
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| are similar in terms of how they respond
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| | choose this because motivations and
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| to a particular marketing mix or in other
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| | concerns are what cause consumers to act
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| ways that are meaningful for marketing
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| | on an offer.We don't think that there is
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| planning purposes.The entire field of
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| | only one "correct" way of doing
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| market segmentation is based on this
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| | segmentation research, nor that there is
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| idea, that consumers have differing
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| | a single set of segments waiting to be
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| needs. They will find value in different
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| | "discovered." While the analysis needs to
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| products. They will respond differently
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| | employ objective statistical methods, any
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| to marketing communications. They will
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| | number of judgments, preferences and
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| gravitate toward different price
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| | practical considerations go into the
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| points.Because of this, businesses
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| | design of the process and the final
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| operate more efficiently if they can act
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| | determination of the segment structure.
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| on those differences. A business that
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| | The same dataset can yield different
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| tries to offer a single undifferentiated
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| | segments.Market segmentation spotlights
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| product with generic marketing support
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| | opportunities for health plans to improve
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| will always lose out to more nimble
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| | marketing and sales, staff training,
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| competitors who have specific targets and
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| | customer service, new enrollee intake,
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| know how to serve them.We often work for
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| | business planning, and public relations.
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| health plans. In the Medicare Part D
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| | It will be used by health plans that want
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| world for instance, health plans are
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| | to assure they emerge from this period of
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| struggling to make sense out of new
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| | dramatic Medicare market change as a
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| regulations while meeting very tight
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| | coverage provider of relevance and
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| deadlines. But today's difficulties are
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| | viability. Part of this means achieving
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| going to give way to a market where
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| | sales and marketing goals. Part of this
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| segmentation will be of great benefit
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| | means establishing a market position
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| because mass marketing will not
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| | where consumers think of you as you'd
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| work.Which Segment?It is obvious that all
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| | like them to think of you.Compared to
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| competitors cannot target the same
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| | other forms of marketing research, the
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| segment and succeed. A common mistake is
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| | sample sizes for segmentation studies
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| to assume that you must focus on the
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| | tend to be large. The simple reason is
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| "heavy buyers" who, in reality, are often
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| | that you need to be able to profile
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| not the most profitable group. For
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| | multiple sub-samples (the segments) with
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| example, a consulting firm may decide to
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| | a high degree of precision, rather than
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| forego targeting Fortune 500 (TM) firms
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| | just the total sample. It is unusual to
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| that are fiercely contested by the Big
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| | use fewer than 500 and not unusual to use
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| Four accounting/consulting firms and
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| | 2,000-3,000.AnalysisThe most complex and
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| instead pursue middle market firms. "Sub
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| | opaque part of segmentation research is
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| prime" lenders and credit card companies
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| | the derivation of the segments-that
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| know exactly who their prospects are, and
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| | literally means dividing the sample into
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| do not bother advertising in Money
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| | a small number of exclusive clusters.
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| magazine or funding public television
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| | This is almost always done by applying
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| shows. Part D players may find market
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| | some form of statistical cluster
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| niches among seniors with, for example,
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| | analysis. The analyst will typically try
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| private Medigap policies and specific
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| | several different cluster "solutions."
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| interests or needs that the plan can
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| | While there are objective statistical
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| address.For health plans, market
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| | measures of the quality of a cluster
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| segmentation is not common. Part of this
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| | solution, they are no more important than
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| is due to health plan cultures developed
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| | informed managerial judgment. Researchers
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| to serve large employer-based health
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| | oftenl offer two or three possibilities
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| plans and retirees. But Medicare Part D
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| | to discuss.The "right" number of segments
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| is an unprecedented public-private effort
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| | is subjective, but in practice companies
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| to create a consumer market. And
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| | tend to settle on four to eight segments.
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| Medicare's Part D program is just one
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| | In a diverse, complex, and lucrative
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| element of a far reaching effort to use
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| | category more might be called
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| private health plans to control Medicare
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| | for.Agreeing on the number of segments,
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| expenses. We believe the market
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| | as well as the labels that will be
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| understanding developed through
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| | attached to them, always requires careful
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| segmentation will serve in a variety of
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| | study of their full profiles. While the
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| ways.Identifying and targeting one or a
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| | segments may be defined with one class of
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| few segments instead of the entire market
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| | basis variables (e.g. attitudes about
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| allows the firm to use its resources more
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| | fashion and shopping), you always need to
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| effectively. Market segmentation means
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| | describe the segments in terms of other
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| products and messages more aligned with
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| | variables (e.g. demographics, spending,
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| the needs of selected
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| | media preferences, preferred brands) that
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| consumers.Researching SegmentsSome type
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| | were not part of the definition of the
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| of systematic research is required as a
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| | segments.ApplicationAn important
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| foundation for market segmentation. Most
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| | deliverable from most segmentation
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| often, this research entails a sample
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| | research is a tool for classifying other
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| survey which should be done by research
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| | consumers into the segments. This could
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| experts.Segmentation research addresses a
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| | be a formula where by asking a small
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| set of fundamental questions:
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| | number of questions you can place a "new"
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| 1. How many segments are there?
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| | consumer in one of the segments. It could
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| 2. How large is each segment?
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| | be a set of logical rules ["if combined
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| 3. How do you define the segments?
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| | account balances >$10,000 + have at least
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| 4. How do you describe the
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| | three accounts + non-mortgage debt <
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| segments?Segments are typically defined
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| | $20,000: assign to segment
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| by dimensions such as:- Behavior-such as
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| | G"].ConclusionMarket segmentation is a
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| the frequency of purchasing, total
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| | far-reaching strategy that can benefit
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| spending, or the mixture of stores
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| | players.The underlying rationale is to
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| shopped (switching, investigating,
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| | use your resources more efficiently by
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| comparing, delegating decisions),
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| | serving consumer needs better. The
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| or- Characteristics-such as
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| | mechanism is to treat the market as
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| geodemographics for consumers or SIC
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| | consisting of multiple segments with
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| codes for businesses (health conditions,
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| | different needs, rather than as a mass
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| subsidy status, current coverage status),
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| | market where "average" really suits no
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| or- Attitudes-such as financial
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| | one very well.The research requires a
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| sophistication, fashion orientation, or
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| | sample survey. It defines and describes
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| disposition to adopt new technologies
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| | segments from which the health plan can
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| (interest, optimism).The variables that
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| | choose one or more targets. We believe
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| are used to define the segments are
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| | playser in the new Medicare market are
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| called the "basis." The basis is chosen
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| | especially ready to get more "bang for
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| in light of how the segmentation will be
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| | the buck" by more precisely meeting
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| applied. Direct marketers, for instance,
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| | segments' needs and by using marketing
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| carefully dissect their databases in
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| | tools to which that segment will respond.
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